1. The effect of city reputation on Chinese corporate risk-taking.
- Author
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Li, Sen and Jiang, Haifeng
- Subjects
- *
CORPORATE image , *COUNTERPARTY risk , *MODERN society , *REPUTATION , *INFORMATION asymmetry - Abstract
City reputation is a valuable asset for the local economy and firms in the contemporary society. However, the impact of city reputation on micro-level firms has been largely overlooked by the literature. This paper uses the National Civilized City (NCC) policy in China as a quasi-natural experiment to enhance city reputation. We employ the DID approach to investigate the relationship between city reputation and corporate risk-taking. The result shows that corporate risk-taking significantly increases following the NCC policy adoption. Moreover, information asymmetry can strengthen the positive impact of city reputation on corporate risk-taking. Channel tests show that city reputation improves financial condition and decreases default risk, leading to improved risk-taking tolerance. Overall, our paper indicates that city reputation is an important mechanism to improve corporate financial performance, providing empirical evidence for local governments to pursue the NCC title. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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